Archive for September, 2008

For Stocks, Worst Single-Day Drop in Two Decades

September 30, 2008
September 30, 2008

Even before the opening bell, Monday looked ugly.

But by the time that bell sounded again on the New York Stock Exchange, six and a half frantic hours later, $1.2 trillion had vanished from the United States stock market.

What had started 24 hours earlier, with a modest sell-off in stock markets in Asia, had turned into Wall Street’s blackest day since the 1987 crash. The broad market, as measured by the Standard & Poor’s 500-stock index, plunged almost 9 percent, its third-biggest decline since World War II. The Dow Jones industrial average fell nearly 778 points, or 6.98 percent, to 10,365.45.

Across Wall Street, no one could quite believe what was happening on the floor — the floor of the House of Representatives, not the New York Exchange.

As lawmakers began to vote on a $700 billion rescue for financial institutions, the Voyageur Asset Management trading desk in Chicago went silent. Money managers gaped at a television screen carrying news that seemed unthinkable: the bill was not going to pass. Shortly after 1:30 p.m., the rescue was rejected.

“You just felt like the world was unraveling,” Ryan Larson, the firm’s senior equity trader, said. “People started to sell and they sold hard. It didn’t matter what you had — you sold.”

Frustration, and then panic, coursed through the markets. Investors feared the decision in Washington would imperil the financial industry, as well as the broader economy.

At the Federal Reserve and other central banks, policy makers were also anxious. Even before the vote on Capitol Hill, central bankers tried to jump-start the credit markets. They offered hundreds of billions of dollars in loans to banks around the world because banks and investors were unwilling to lend to each other. But neither the stock market nor the credit markets appeared to respond.

Just 24 hours earlier, few imagined Monday would play out this way. Treasury Secretary Henry M. Paulson Jr. and the House speaker, Nancy Pelosi, announced Sunday afternoon they had agreed on terms of a bailout.

But while Congressional aides and lawmakers worked on the details, the credit crisis that began more than a year ago in the American mortgage market was setting off new alarms in Europe.

Shortly before 6 p.m. New York time on Sunday, Belgium, the Netherlands and Luxembourg agreed to invest $16.2 billion to rescue a big bank, Fortis. A few hours later, the German government and a group of banks pledged $43 billion to save Hypo Real Estate, a commercial property lender. At 2:50 a.m., news came that the British Treasury had seized the lender Bradford & Bingley and sold the bulk of it to Banco Santander of Spain.

“We will continue to do what is necessary,” a somber Gordon Brown, the British prime minister, told reporters at 10 Downing Street in London.

In Tokyo, where stocks had opened higher in early trading on Monday, worries quickly set in. Traders returned from lunch to reports suggesting the financial crisis was taking a toll on the global economy. Markets across Asia began to sell off.

In Tokyo, the Nikkei 225 sank 1.5 percent. In India, stocks fell nearly 4 percent. In Hong Kong, where a big bank, HSBC, raised key lending rates because of the credit market turmoil, the Hang Seng tumbled nearly 4.3 percent.

As events unfolded in Asia, a major American bank was in trouble. Regulators in Washington were rushing to broker the sale of the Wachovia Corporation to Citigroup or Wells Fargo.

At about 4 a.m., Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, called Citigroup executives to say Wachovia’s banking business was theirs.

On Monday morning, before financial markets in the United States had opened, Federal Reserve officials were alarmed that credit markets in Europe and Asia had spiraled even deeper into crisis on Monday.

Fed officials could see that money markets were freezing up in every part of the world, even though the Fed and other central banks had expanded their emergency lending programs last Thursday. This time, Fed officials felt compelled to provide a true show of force by expanding their existing loan arrangements by an unprecedented $330 billion.

As investors in New York were getting up, the credit markets were again flashing red as banks reported higher borrowing costs. Investors continued to seek safety in Treasuries. The yield on one-year Treasury bills, for instance, fell to almost zero, meaning investors were willing to accept no return just for the assurance that they would get their money back.

When trading opened on the New York Exchange at 9:30 a.m., stocks immediately fell 1 percent.

Worried officials at the Fed announced at 10 a.m. that the central bank would increase to $620 billion its program to lend money through foreign central banks, up from $290 billion, to keep credit flowing. The central bank also said it would double the money it lends out domestically through an auction program to $300 billion.

Many eyes on Wall Street turned to National City, the Cleveland-based bank, which has a $20 billion portfolio of troubled loans it is trying to sell. National City’s shares plummeted 50 percent to $1.50 in early trading, prompting Peter E. Raskind, the bank’s chief executive, to assert that the bank was sound.

“It’s not overly dramatic to say that investors are panicking. You can see it in the market and we can feel it,” Mr. Raskind said in an interview.

In New York, 10 executives at an investment firm, Bessemer Trust, huddled to discuss the markets. A question arose: What would it take to restore confidence to the credit markets? There were few upbeat answers, though one said Citigroup’s takeover of Wachovia could pave the way for more consolidation in banking. “It is the type of solution that makes good sense in these challenging times,” Marc D. Stern, Bessemer Trust ’s chief investment officer, said as he recounted the meeting.

But Mr. Stern and his group would soon be dismayed by what was happening in Washington.

At 1:30 p.m. the House began to vote on the rescue package that Mr. Paulson and Congressional leaders negotiated over the weekend. About 10 minutes later, when it became clear that the legislation was in trouble, the stock market went into a free fall, with the Dow plunging about 400 points in five minutes.

At his home office in Great Neck, N.Y., Edward Yardeni, the investment strategist, received terse e-mail messages from clients and friends. “Is this the end of the world?” one asked. Another sent a simple plea: “Stop the world, I want to get off.”

Mr. Yardeni and other analysts said the action in Washington left many investors discouraged and feeling powerless. “You can come into the office and spend a lot of time researching companies, trying to understand them. You’ve got a portfolio that you think should do well,” he said. “And none of that matters.”

Marc Groz, chief executive of Topos Partners, a hedge fund in Stamford, Conn., put it this way: “It’s frustrating for someone like me because I don’t have a pipeline to what is happening in Washington, D.C.”

The stock market briefly rallied, then slowly lost ground in the afternoon. A flurry of sales minutes before the close sent the Dow down another 200 points, to its lowest level for the day.

Shortly after the closing bell rang on the floor of the Big Board, Mr. Paulson, looking exhausted, spoke to reporters at the White House. He lamented the vote, but vowed to keep pressing Congress for a broad rescue plan to help ease stress in the credit markets.


China Tainted Milk Crisis Triggers Global Recalls: Greed for Profits

September 29, 2008

Melamine, an industrial chemical that made its way into China’s dairy supplies, has been blamed in the death of four babies and the illnesses of 53,000 others. Now it has turned up in numerous Chinese-made exports, ranging from candies to yogurt to rice balls.

The British supermarket chain Tesco has removed Chinese-made White Rabbit Creamy Candies off its shelves as a precaution, as reports from Singapore and New Zealand state that the candy tested positive for melamine, an industrial chemical used to make plastics and fertilizer.

Health experts say melamine can cause kidney stones and lead to kidney failure. Infants are particularly vulnerable. More than a dozen countries have now banned or recalled Chinese dairy products.

Six things you need to know to understand the financial crisis

September 29, 2008

Financial calamities have come in waves during the past two weeks, each one sending another jolt through the US economy.

These daily – sometimes hourly – developments have included continued declines in the housing market, government bailouts of troubled financial giants, and the disappearance of venerable Wall Street firms. Suddenly, Americans have had to become more familiar with financial terms and learn to navigate complex details about the inner workings of a US – and global – financial system that is in crisis.

Why mortgage-backed securities are a problem
During the housing boom earlier in the decade, many lenders relaxed standards and made subprime loans to homebuyers. These loans were risky and had interest rates that rose over the life of the loans, driving up payments. Wall Street bought up these subprime loans, put them into pools, repackaged them, and sold them.

Investors poured at least $1 trillion into these securities backed by subprime mortgages. Then the housing market slowed and home buyers defaulted in record numbers because they couldn’t keep up with mortgage payments. The value of mortgage-backed securities plummeted.

These losses are at the root of today’s crisis. As the housing market continues to decline and the economy slumps, losses are spreading to the traditional mortgage market and threaten to deepen the economic downturn. Investors – pension funds, hedge funds, mutual funds, and banks – have so far lost about $600 billion on securities backed by prime and subprime mortgages, according to Global Insight.

Credit default swaps: a time bomb like mortgage-backed securities
“Financial weapons of mass destruction” is what billionaire investor Warren Buffett called credit default swaps. These arcane financial products brought down the nation’s largest insurer, American International Group.

Credit default swaps are insurance contracts purchased by investors to protect them against losses on their debt-backed securities – AIG lost $18 billion because it had to pay up on policies on mortgage-backed securities.

Swaps became popular among speculators and hedge funds that did not own the underlying securities but used them to turn quick profits. Swaps are also backed by credit cards, car loans, business, and other loans, and a long chain of swap transactions links investors in this $62 trillion market. Many of these bets were made with borrowed money.

“It’s why we’re in this mess,” said Lance Pa, research director for Capital Advisors Group, a Newton money manager. “We understand how it works,” Pa said about the market, but “don’t know where the exposure could lie. That’s the problem.”

The financial market crisis leads to a credit crunch

As losses mounted, panic swept through the financial system. Loans – to businesses, banks, and consumers – become scarce and expensive, creating a credit crunch. Without loans, there is less spending, which causes the economy to slow.

Corporations are having difficulty tapping the credit market to fund daily expenses, from payrolls to truck leases. American Express reduced credit card limits for more cardholders. And one of the country’s largest auto dealers, Bill Heard Enterprises Inc., went out of business, because it couldn’t arrange financing for car buyers.

The credit crunch is the primary reason that Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke crafted a bailout plan, which Bernanke said was urgent to ease the credit crunch. A bailout allows the federal government to buy mortgages from financial companies. That in turn frees up capital in financial companies so that they can lend to businesses for investments and to consumers for purchases using credit cards and other loans.

“In light of fast-moving developments, it is essential to deal with the crisis at hand,” Bernanke told the Senate Banking Committee last week.

Bailouts could ease the credit crunch
The Bush administration devised a plan to spend $700 billion plan to buy back bad mortgages from faltering financial companies and investors. Add to that the $85 billion federal takeover of American International Group, the nation’s largest insurer, and another $200 billion will be injected into Fannie Mae and Freddie Mac, mortgage companies that support the US housing market.

In total, nearly $1 trillion could be the price tag on the taxpayer-funded bailout – that’s more than $3,000 for every man, woman, and child in the United States.

Nariman Behravesh, chief economist for Global Insight, a Waltham consulting firm, said the final cost will be lower, because the government will sell off many of the assets it is taking over. But even if the mortgage bailout costs $700 billion, that would be equal to just 4.5 percent of US gross domestic product, he said. By comparison, Japan’s bank bailout in the 1980s and President Franklin Roosevelt’s bailout of the US banking system amounted to 20 percent of each country’s GDP at the time.

Banking system remains a problem
The strength of the nation’s banking system – the foundation of the US economy – also is a chief concern for Paulson and Bernanke. Banks have been under severe strain as borrowers have defaulted on their mortgage payments, leaving lenders with portfolios of repossessed homes and rising losses.

While numerous lenders that made subprime mortgages began to fail in 2007, the problems accelerated in recent weeks as major banking companies failed.

IndyMac Bank in Pasadena, Calif., was seized by federal regulators in July. Last week, regulators seized the nation’s largest thrift, Washington Mutual Inc. in Seattle, which was teetering from its portfolio of subprime loans. JPMorgan Chase purchased the thrift for $1.9 billion. It was the biggest such failure in US bank history. Bank of America Corp., the nation’s largest banking company, also acquired Merrill Lynch & Co., the nation’s largest broker.

Going forward, there will be more market share in the hands of fewer financial institutions and less competition.

How bad is the economy: Recession vs. Great Depression?
While the events of the past two weeks were dramatic, they do not rival the Great Depression. Then, 1,500 banks went under, factories closed, and one in four Americans was out of work. The current crisis hit Wall Street hard but has not devastated the US economy. Unemployment in August was 6.1 percent, a historically low rate, and the United States is technically not in a recession, which is defined by two consecutive quarters of negative economic growth – the economy grew 2.8 percent in the second quarter, the latest data available.

However, many economists believe the country entered recession in the third quarter, and if the financial system does not stabilize the economy may enter a long, deep downturn. Next year, Global Insight predicted, the US economy would grow less than 1 percent, and the jobless rate could reach 7 percent – or higher. Things could be worse without an injection of federal bailout money into the system, which would offset some of the negative impact of the credit crunch, Behravesh, the economist, said.

Jews and muslims Share Holy Season in Jerusalem

September 29, 2008

JERUSALEM — Jews are not quiet in prayer. Even when focused on the most personal of quests, as they are this season — asking God for forgiveness for dark thoughts and unkind deeds in the past year — they take comfort in community, chanting and swaying and dancing in circles, blowing the trumpet-like shofar, a ram’s horn.

These are the days of the Jewish month of Elul, leading up to Rosh Hashana and Yom Kippur, when tradition says that God determines who will live and die in the coming year, and the Western Wall plaza in Jerusalem’s Old City is a festival of piety that runs from midnight till dawn. Tens of thousands roll in and out during the night reciting the special penitential prayers called Slihot.

Coincidentally — the Muslim calendar shifts every year — it is also Ramadan, the month when the faithful believe that God gave the Koran to the Prophet Muhammad, a time of fasting, self-reflection and extra prayer, when being at Al Aksa Mosque here is even more important than usual. At night, when the fasting is over, the celebrating begins. The ancient stone alleyways of the Old City are lit up with strings of colored lights, special foods are prepared, and Palestinian Muslims come and go by the thousands.

The result has been a kind of monotheistic traffic jam in September along the paths of the tiny walled Old City, especially as dawn approaches each day. The Muslims and Jews walk past one another, often intersecting just at the Via Dolorosa of Christian sanctity, as they hurry to their separate prayer sessions: the Muslims above at the Dome of the Rock, the Jews just below at the Western Wall.

It would be wrong to call these tense encounters, because there are essentially no encounters at all. Words are not exchanged. Religious women in both groups — head, arms and legs covered in subtly distinct fashion — look past one another as if they took no notice. Like parallel universes with different names for every place and moment they both claim as their own, the groups pass in the night.

But there is palpable tension. Israeli soldiers walk in small packs to ward off trouble. Security cameras bristle from most walls and intersections. Commemorative stone plaques mark past acts of terrorism (“On this spot Elhanan Aharon was killed. From his blood we will live and build Jerusalem.”) while Palestinians complain that they are losing the competition for control of these ancient byways and that those in the occupied West Bank are barred from coming without special permission.

“I don’t believe the Jews and Muslims can ever have peace here,” Said Abed said on his way to dawn prayers at Al Aksa when asked his view of the unusual intersection of Slihot and Ramadan. “The Jews are trying to control Jerusalem by deciding who can stay here.”

Some Muslims defy archaeology and history by saying that Jews have no link to the site and that it is purely Muslim sacred territory. The same problem exists on the other side as well — some Jews believe that the holiness here is theirs alone.

Inside a closed-off area of the Western Wall plaza a few hours earlier, four young men were studying Talmud, reading to one another rabbinic commentary about a prayer for rain that is said as the new year starts. What did they think of the coincidence of Jewish and Muslim prayers only yards from each other during these days?

“The Muslims shouldn’t even be there,” offered Haim Ben Dalak, 18, of Petah Tikvah, who just started a year at a Jerusalem religious seminary before his army service. “There should be a Jewish temple there. That’s what we believe.”

Thirty years ago, the Israeli poet Yehuda Amichai, who knew this city as few others have, wrote:

The air over Jerusalem is saturated with prayers and dreams like the air over industrial cities.

It’s hard to breathe.

The Hebrew name for the city, Yerushalayim, ends with “-ayim,” a grammatical construction used for pairs of things. The device, known as a dual, exists in Hebrew and Arabic but few other languages. Which duality is being invoked has been lost to history, but it would not be hard to imagine that it is the one of heaven and earth, of holy and profane, and the difficulty of their coexisting. But of course everyone tends to focus on the holy.

Called Al Quds (the Holy One) in Arabic, Jerusalem is the city that Mohammad visited on his night journey to heaven. Just as Jews pray facing Jerusalem from anywhere in the world, Muslims did so originally as well, until the site was moved to Mecca. Jerusalem remains for Muslims the third holiest city after Mecca and Medina.

Rabbi Shmuel Rabinowitz, rabbi of the Western Wall for the past 12 years, goes every midnight during this period to Slihot at the wall.

“Night is a special time for spiritual reflection and this wall makes even those with hearts of stone shed a tear,” Rabbi Rabinowitz said after his half-hour Slihot prayer next to the wall, its crevices revealing the imploring notes to God stuffed there by visitors.

Above his voice can be heard scores of groups — some large, some small, all of slightly different tradition — praying in a mix of Hebrew and Aramaic, acknowledging sin, seeking redemption.

Most are devout, but some are secular Jews who come here for Slihot season, a growing trend.

“We love coming to Jerusalem at this time of year,” said Ada Lugati, a hairdresser from the northern city of Afula, who was dressed in distinctly nonobservant manner, in slacks with a uncovered head and bare midriff.

“It feels here as if the heavens are open to our prayer,” she said as she looked up at the clear night sky. Avi Kenig, 17, starting a year of religious study at an institute just across from the wall, put it this way: “We have been taught that here we are at the center of the world. These are the gates to heaven.”

Joys of tax-free saving and investing

September 29, 2008

Posted date: September 28, 2008

THE LAND OF SMILES CALLED the Philippines is no happy place for a small saver or investor. This is a sentiment that has often been repeated among low-income groups to academicians to Makati-type executives.It’s not just that developing the discipline to save regularly requires touch sacrifices; it is because the taxman’s bite on every peso your savings and investments earn is huge.

A new law called the Personal Equity Retirement Account (Pera) Bill is pregnant with promises to change all that. Financial professionals and ordinary Filipinos who are savings-conscious can hardly wait for the implementing rules and regulations of the law to be published and enforced.

Nest egg

Republic Act No. 9505 (full text available for download at at its core will allow Filipinos to have a voluntary retirement nest egg that lets money compound more quickly because of tax sweeteners.

Everybody knows that living on Social Security System or Government Service Insurance System pension alone means you have to cut it pretty close to the bone.

Also, Filipinos working and living overseas are not required to become members of SSS or GSIS, and while they may volunteer to contribute, most end up not doing so.

When you come home after working overseas, the Pera can serve as your ticket to comfortable golden years, says the bill’s main proponent, Sen. Edgardo Angara.

Yet, few realize what the bill will mean to ordinary Filipinos.

“At this point, frankly speaking, not a lot of people appreciate the Pera Bill. If the government does not do more to educate ordinary Filipinos, the only people who will benefit from this are those who are already saving and investing, when in fact this is for the low- to middle-income and first-time investors,” says Alvin Tabañag, a registered financial planner.

That banks and other financial services companies are not likely to go out of their way to teach the poor about how to get wealthy is expected, says Tabañag, who is also the founder and training director of AdvantagePlus Consulting and creator of “They can’t make money out of them,” he says.

Tabañag has made it his personal crusade to teach things like the Pera Bill and other aspects of financial literacy for free to schools, cooperatives and barangays. “The rich already have people working for them who will make them richer. It’s the poor who need this kind of knowledge,” he says.

Pera Bill

The Pera Bill has the potential to make the poor slide closer to financial health because even small amounts of money invested in a personal equity retirement account (Pera) grow much faster without the drag of taxes.

Based on RA 9505, there are three major tax sweeteners for long-term savers who put their money in Pera. One, all earnings from investments and reinvestments are tax exempt, two, contributors get an income tax credit of five percent of their total contribution up to a maximum of P100,000 per year and P200,000 for those working and living overseas, and three, at age 55 or in the event of untimely death, these funds go directly to the contributor or the heirs tax-free. No need for the funds to go into probate and for heirs to pay hefty estate taxes in case of untimely death.

For Filipinos working overseas who are not required to pay income taxes, the tax credit can be deducted from any tax they owe to the government.

Maximize benefits

Although the IRR for the Pera Bill has yet to come out, here are some strategies you can use to maximize its benefits:

1. Start early. The Pera Bill encourages long-term savings because contributors will only benefit if the money stays there until 55 years of age. “Just imagine if you are 25 years old, that would be a 30-year saving time period where you can allow your money to grow tax-free,” Tabañag says.

Based on his computations, Tabañag says the tax credit of someone who works overseas and contributes P200,000 to his Pera could grow to P1 million in 30 years time. If both spouses work overseas and do the same, tax credits alone could reach up to P2 million. “Granted, a million pesos will not feel as significant in 30 years, but a million is a million especially if it’s just a tax bonus,” Tabañag says.

The power of compounding—letting earnings and interest on your investments earn more interest—is a small saver’s best friend because allowed to work its magic over a longer period of time, say 30 years, it can build a bigger nest egg than someone who starts investing bigger amounts at a much later date.

2. Save regularly. Investing experts teach that how much and how often you save matters far more than what your funds return. This is the principle behind such strategies as peso cost averaging where you invest regularly whether the market is up or down.
Suppose you start contributing in January by saving only two percent of your P40,000 salary. But because you are such a brilliant investor, you put your Pera into top-returning funds every year. You would finish 2024 with more than P400,000 in your Pera.

Now suppose you were so clueless about investing that you picked mediocre funds year after year, but you were frugal enough to save a full six percent of your salary. You’d hit 2024 with more than P844,000. That’s right: More than twice as much as the brilliant saver.

3. Maximize your contributions. If you have the funds to invest for the long-term, maximize your contributions, Tabañag advises.

Earnings from bank deposits are taxed 20 percent withholding at source. Mutual funds, cash values from insurance policies and pre-need plans are also taxed at source. When you sell your stocks, you are slapped with a 20 percent capital gains tax and even dividends are taxed. Put all of that under the umbrella of your Pera and you get a lot of drag out of your savings’ sails.

Tax credits, while small at five percent of the total contribution, is also another incentive for putting as much as you can in Pera. Since both spouses can claim tax credits, a family can get a total of P10,000 deducted from their income tax.

4. Keep a healthy balance on your emergency fund. Carlo Cariño, senior partner at the Cariño and Mabalot Law Offices, says contributors should remember to stay liquid and maintain an emergency fund.

“Adhere to the advice to maintain three to six months of your expenses in an emergency fund you have easy access to. What you should put in your Pera account should stay there for the long term or else you will be charged with penalty fees and taxes,” he says.

The penalty fee will be set by the forthcoming IRR of the law.

5. Diversify. The Pera Bill allows contributors to set up five different accounts, and Tabañag says this will be good for contributors looking to diversify their portfolio and minimize their risks. By putting your funds in a good blend of stocks, bonds, mutual funds, unit investment trust funds and other kinds of investments depending on your risk preference, you earn more as well as protect yourself when the market goes south.

6. Don’t obsess about performance but rebalance regularly. It may be tempting to track investment returns on a daily basis and move your money in and out of the market, but this may entice you into the classic mistake of chasing yesterday’s winners. Experts advice rebalancing your portfolio once or twice every year.

This may all look daunting, but saving and investing has never looked more attractive for Filipinos who have long been discouraged from doing so by tax-depressed returns.

ACER Aspire 4920 – 5A1G16Mi

September 29, 2008

ACER Aspire 4920 – 5A1G16Mi
Processor: Centrino™ Duo Intel® Core™2 Duo T5550 (2*1.83GHz, 2MB L2 cache, 667MHz FSB, 64bit) Intel GM965 Express chipset, Memory: 1024MB DDR2, Hard Drive: 160GB SATA.Optical Drive: DVD±RW, Graphics Controller: Intel GMA X3100 VGA upto 384MB. Display: “14.1”WXGA CrystalBrite 4*USB2.0, S-Video, ExpressCard 54″ Built-in Devices: Gemstone Design +Dolby® Home Theater+ Crystal Eye Camera / 5in1 CARD + S-Video Out, GigabitNIC / FAX. 3D Holographics ,over,Bluetooth, Networking: “56K V.92 10/100TX Acer802.11bg ” Weight: 2.4kg. Battery: 6 cell . OS: Linux (Made in China.Warranty: 1 Year Limited )

DEBT: All borrowed out

September 28, 2008

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The global credit crunch has arrived on Main Street USA, leaving American consumers – the engine of the economy – awash in debt and struggling in a way they haven’t known for years

BELLINGHAM, WASH. — The mall is almost empty.

At the once-busy Bellis Fair mall in Bellingham, Wash., there are only a few customers browsing the aisles of the Target, Kohl’s and Sears stores.

Outside the Bellis Fair Target store, the three members of the Baca family sit on a bench. “Can’t really shop, no money,” says Stephanie Baca, a caregiver with a visiting nurse service, who holds her nine-month-old daughter Naomi on her lap.

Ms. Baca’s husband Marlon, who works at a restaurant in the mall, sits next to her. Since they don’t have money to spend, today’s mall activity is “just walking around,” Ms. Baca says.

Lately, the couple has looked for ways to cut costs. “We just try to see where things are the cheapest. Anything – clothing, food, gas,” she says.

The fabled American consumer, driver of two-thirds of U.S. economic activity and de facto engine of the world’s economy, is vanishing from the aisles of the nation’s stores. Already reeling from the implosion of the country’s housing market and the jobs shed by the slowing economy, the voracious U.S. consumer is now being choked by evaporating credit. The meltdown on Wall Street, which also has its roots in the housing debacle, is creating a lending lockdown between banks that is now turning off the spigot of cash to businesses and consumers.

Businesses are struggling to get credit, with short-term markets seized up as interest rates soars and lenders hoard cash. The liquidity crisis took down Washington Mutual Inc. on Thursday night as its latest kill, the biggest bank failure in U.S. history. Consumers are feeling the pinch as lenders tighten credit card limits and home equity lines of credit, and toughen mortgages and student loan requirements.

Even if the cash were available, it’s not clear consumers are in the mood to spend. Once so hungry to borrow and spend, an ever-more fearful consumer now looks poised to retreat further from the malls and bars, pinching pennies. The growth in credit has slowed substantially, with car and home loans already all but stagnant, and is teetering at the edge of a decline, which would be a first since 1992.

“There’s no doubt the consumer has downshifted, and part of the reason is they’re borrowing at a slower rate – but make no mistake, they’re still borrowing,” said James Paulsen, chief investment strategist at Wells Capital Management.

The credit crisis has created a greater change, one sharply away from the free and flagrant-spending days of recent years. “That one is attitudinal,” Mr. Paulsen said of the change. “Among consumers. Among lenders. Among everyone. It’s a cultural thing that will take, at a minimum, a couple years to rebuild – if not longer.”

The apparently waning appetite of American consumers is among the greatest risks facing the U.S. economy – with major potential reverberations in Canada and around the world. With so many exports going south, from auto parts to oil to lumber for houses, a U.S. recession means hard times if not worse for Canada.

Cash register-shy consumers could undermine the massive $700-billion (U.S.) bailout that is being negotiated in the nation’s capital to quarantine bad bank debt and prod banks back into the lending business.

The government bailout is all about rebuilding shattered confidence, to slowly soak up the disastrous lending decisions of this decade that have unfolded in spectacular ways and are on the verge of ramming the world’s most powerful economy in to the ground. It’s about believing the money can keep moving.


The fortunes of the Bellis Fair mall rose with those of hungry American customers.

The mall opened in August, 1988, located on Interstate 5 north of Bellingham. The mall’s development was a huge local controversy, with opponents fearing the gutting of the quaint city’s downtown and proponents saying Bellis Fair was the key to salvaging the local economy.

It did. The large mall – in a city of 100,000, it is almost half the size of Toronto’s Eaton Centre – draws visitors from a much wider area, 13 million in all annually, which includes upwards of three million Canadians on cross-border shopping jaunts.

A lot of that shopping was financed by credit.

Since the late 1990s, the personal savings rate in the U.S. has plunged to almost zero from 3 per cent of income, according to figures from the Federal Reserve and research by Innovest Strategic Value Advisors Inc. Meanwhile, the amount of disposable income going to service credit card, mortgage and other debt has risen steadily. Real wages haven’t risen much, but credit card debt is up 80 per cent.

Bellis Fair is owned by General Growth Properties Inc. of Chicago, a firm founded in Iowa five decades earlier by Matthew Bucksbaum and his brother Martin, and is currently run by Matthew’s son, CEO John Bucksbaum. The family owns about 9 per cent of the company and in 2000, during the good times, the family foundation created the Bucksbaum Award, $100,000 handed out every two years to a visual artist, the richest such prize in the world.

As consumer spending climbed, General Growth, which owns more than 200 malls across the country, renovated Bellis Fair in 2003, right at the same time house prices were shooting higher. Consumers pulled equity out of their homes, borrowing to fill those houses with the wares sold at the Macy’s, Target and other Bellis Fair stores.

Just last summer, sales were up as much as 20 per cent from a year earlier, mall manager Dennis Curtis said at the time. Now, much like Wall Street, Bellis Fair is up against the wall. Its owner is also being hammered. With almost $20-billion of debt coming due over the next three years, concerns have mounted about the company’s ability to refinance, and its shares have been pummelled, falling more than 50 per cent since June. On Monday, the company said it is considering asset sales or a merger because it can’t refinance its debt on affordable terms.

Empty Bellis Fair and its struggling owner are not alone. U.S. stores are looking at the weakest holiday shopping season since 2002, according to the National Retail Federation. Neiman Marcus, the high-end U.S. retailer, said this week that the “months ahead will be difficult.”


With banks pulling back on lending, credit is quickly becoming less available to consumers.

American Express Co., for instance, is lowering credit limits at twice its normal rate. Even in good times, the company constantly monitors how much credit is available to cardholders, with an eye to increasing limits for good customers or cutting back to reduce risk of default on less reliable accounts. In a typical year, Amex will change the credit limit for one out of five of its customers, with most of those changes being increases. About 4 per cent of borrowers see their credit cut in a normal year.

Starting in summer 2007, as the subprime mortgage debacle emerged, Amex began to retrench, gradually tightening its lending. Now, Amex is lowering the credit limit for 10 per cent of its customers, said Kimberly Forde, a company spokeswoman.

Amex looks for obvious signs of potential distress, such as whether a person has a subprime mortgage, or lives in Los Angeles or Miami, two markets where housing prices have been decimated in the past year, Ms. Forde said.

Still, credit card debt continues to growth. Revolving loans – credit card debt – grew at an annualized rate of nearly 5 per cent in July, according to the Federal Reserve, a rate lower than the average for the years 2006 and 2007 but higher than in 2004 and 2005.

Loans for cars and home equity borrowing are freezing up faster. These so-called non-revolving loans grew only at a 0.5-per-cent rate in July compared with steady growth of around 5 per cent as recently as the spring.

Total consumer credit in the U.S. stands at nearly $2.6-trillion and is near its first decline since 1992, the end of three difficult years that were also marked by widespread financial trauma. Consumer credit growth in July was 2.1 per cent, down sharply from 5.1 per cent in June and less than a third of the 7.5-per-cent growth in recorded in late year’s July-September period.

Every kind of credit is getting crunched. The Student Loan Network, a U.S. information service, said more than 30 lenders have cut off loans to students since mid-2007 and added that it is “virtually impossible” to get a student loan without a co-signer.

Many smaller banks may further pare back lending because of the effective nationalization of Fannie Mae and Freddie Mac. Small banks invested in shares of those two mortgage giants because they were, in theory, safe and steady investments that delivered reliable dividends. But those dividends have been halted – which according to the American Bankers Association, will suck more than $100-billion away from the mostly small banks, reducing their cash flow and ability to lend money.

While lenders are tightening up, money previously lent is not getting paid back. Foreclosures are escalating and, on Thursday, Discover Financial Services, the No. 4 credit card company, said its loan-loss provision surged 80 per cent in the quarter ended Aug. 31.

TransUnion, a credit tracking agency, said this week that the number of U.S. auto loans that were past due more than 60 days rose 11.5 per cent in the second quarter from a year earlier, adding that the “availability of home equity for financing auto purchases has diminished significantly.” And the number of Americans past due more than 90 days on one or more of their credit cards rose 14.3 per cent as average card debt per borrower ticked up past $1,700.


Signs of the squeeze on consumers are littered across the landscape. Measures such as the Consumer Comfort Index are near a record low, suggesting Americans are uncharacteristically depressed about their economic prospects. Conducted since 1985, the comfort index’s previous record low was set in the early 1990s recession; a new low was reached in May at minus-51.

Those surveyed are asked three straightforward questions about the state of the economy, their personal finances and whether today is a good time to buy things they want and need. Readings of minus-49 and minus-50 were recorded in August and while the measure ticked up to minus-41 last week and the week before, sentiment is still severely negative

The vise gripping the consumer is being tightened by an array of economic problems. The number of Americans filing for initial unemployment claims is at a seven-year high. Expensive gasoline keeps gobbling up available dollars and has reduced demand for the fuel every week since the spring. Gas sales are down 8 per cent from a year ago.

Housing, the root of the contagion, remains moribund. Sales of existing homes, reported this week, are still flatlining. New homes sales continue to plummet, falling 11.5 per cent in August – to the slowest rate since the hard recession of the early 1990s. Yesterday, KB Home, one of the largest home builders in the U.S., said its quarterly loss quadrupled from a year earlier and noted half of its home buyers backed out of contracts.

And mortgage rates are still going up. Freddie Mac on Thursday said the rate on a 30-year fixed mortgage rose to 6.09 per cent this week, lower than 6.42 per cent a year ago, but higher than 5.78 per cent last week – with the rise in rates erasing about half the decline in the weeks since the government’s effective takeover of the agency and Fannie Mae.

The jump in mortgage rates this week is another tangible sign of tighter credit, said David Rosenberg, economist at Merrill Lynch. “As a result, we expect little rebound in home sales activity. We continue to believe that the bottom in housing is still at least a year away.”


Battered by the bleak news from Wall Street and Washington, many Americans are frightened about the prospect of yet another blow.

“I don’t know what’s going to happen to the economy,” said Barbara Foster, after doing some banking at a Washington Mutual branch near Bellis Fair mall.

“It seems like it’s going to collapse. I’m horrified. I haven’t even looked at my retirement account, it’s so scary.”

Ms. Foster, who has held health care positions and is looking for work, is in full scrimp mode, where every expenditure, from whether to buy blueberries to even renting a movie is scrutinized. “We’ve been living on credit for so long, the government and the people, it’s insane,” she said.

Near Bellis Fair, at the Slo Pitch pub and casino – open 24 hours a day – it’s also pretty empty. “I’m cutting back on all and any extras,” said Mike Glick, a technology consultant, nursing a beer.

“Like gambling. I’d be playing pull tabs, I’m not doing that. And I took the bus here,” Mr. Glick said. He figures he’s in good company. “Normally, this bar would be full. People are in conservation mode, to pay mortgages, rent, those basic bills. Just in the last six months, it’s been a huge change.”

And Mr. Glick, who has closely followed the amazing implosion of Wall Street this month, has little faith the situation will turn around any time soon.

“I don’t think we’ve seen the real depth of how far this’ll go,” said Mr. Glick, in a ball cap, sweater and blue jeans, dismissing the rescue plan. “You have to be a real fool to believe that. This isn’t going to be solved by Congress approving $700-billion.”


Of the $2.5-trillion in

consumer debt:


is in “non-revolving” loans, for cars and houses, compared with $922-billion in 1999


is in “revolving” loans, such as credit cards, compared with $611-billion in 1999.

70 per cent

increase in U.S. consumer debt this decade

Renting Makes More Financial Sense Than Homeownership

September 28, 2008

I have something un-American to confess: I rent an apartment, despite having enough money to buy a house. I plan to keep renting for as long as I can. I’m not just holding out for better prices. Renting will make me richer.

I normally write about stocks for, but the boss asked me to explain to readers my reason for renting. Here goes: Businesses are great investments while houses are poor ones, so I’d rather rent the latter and own the former.

Stocks vs. Houses: Returns

Shares of businesses return 7% a year over long time periods. I’m subtracting for inflation, gradual price increases for everything from a can of beer to an ear exam. (After-inflation or “real” returns are the only ones that matter. The point of increasing wealth is to increase buying power, not numbers on an account statement.) Shares have been remarkably consistent over the past two centuries in their 7% real returns. In Jeremy Siegel’s book, “Stocks for the Long Term,” he finds that real returns averaged 7.0% over nearly seven decades ending 1870, then 6.6% through 1925 and then 6.9% through 2004.

The average real return for houses over long time periods might surprise you. It’s zero.

Shares return 7% a year after inflation because that’s how fast companies tend to increase their profits. Houses have their own version of profits: rents. Tenant-occupied houses generate actual rents while owner-occupied houses generate ones that are implied but no less real: the rents their owners don’t have to pay each year. House prices and rents have been closely linked throughout history, with both increasing at the rate of inflation, or about 3% a year since 1900. A house, after all, is an ordinary good. It can’t think up ways to drive profits like a company’s managers can. Absent artificial boosts to demand, house prices will increase at the rate of inflation over long time periods for a real return of zero.

Robert Shiller, a Yale economist and author of “Irrational Exuberance,” which predicted the stock price collapse in 2000, has recently turned his eye to house prices. Between 1890 and 2004 he finds that real house returns would’ve been zero if not for two brief periods: one immediately following World War II and another since about 2000. (More on them in a moment.) Even if we include these periods houses returned just 0.4% a year, he says.

The average pundit, planner, lender or broker making the case for ownership doesn’t look at returns since 1890. Sometimes they reduce the matter to maxims about “building equity” and “paying yourself” instead of “throwing money down the drain.” If they do look at returns they focus on recent ones. Those tell a different story.

Between World War II and 2000 house prices beat inflation by about two percentage points a year. (Stocks during that time beat inflation by their usual seven percentage points a year.) Since 2000 houses have outpaced inflation by six percentage points a year. (Stocks have merely matched inflation.)

Stocks vs. Houses: Valuations

But while stock returns have come from increased earnings, house returns have come from ballooning valuations, not increased rents. The ratio of share prices to company earnings (the price/earnings ratio) has remained relatively steady. It’s about 16 today, close to both its 1940 value of 17 and to its 130-year average of about 15. Not so, the ratio of house prices to rents. In 1940 the median single-family house price was $2,938, according to the U.S. Census, while the median rent was $27 a month, including utilities. That means the ratio of prices to annual rents was 9. By 2000 the ratio had swelled to 17. In 2005 it hit 20. We can adjust for the size of dwellings, but it doesn’t make much difference. The ratio of single-family house prices to three-bedroom apartments is 19. In’s home town of Manhattan, where more detailed data is available, the ratio of condo prices per square foot to apartment rents per square foot is 22.

Two main events have caused house valuations to inflate since World War II. First, the government subsidized housing by relaxing borrowing standards. Prior to the creation of the Federal Housing Authority in 1934 house buyers who borrowed typically put up 40% of the purchase price in cash for a five- to 15-year loan. By insuring mortgages, the FHA permitted terms of up to 20 years and down payments of just 20%. It later expanded the repayment periods to 30 years and reduced down payments to 5%. Today down payments for FHA loans are as low as 3%. Aggressive lenders offer loans with no down payments or even negative ones so that house buyers can borrow the full purchase price plus closing costs. Some require little documentation of income, assets or ability to pay.

That means more Americans can win loans for homes, and they can win them for far more expensive (larger) homes than their incomes previously allowed. Two-thirds of American households own homes today, up from 44% in 1940, even though the percentage of Americans living alone has tripled during that time. The ratio of house values to incomes has risen 260% in just under four decades.

A second event helped boost house demand in recent years. Share prices plunged in 2000. The Federal Reserve, fearing that the decline in stock wealth would cause consumers to stop spending, reduced the federal-funds rate, the core interest rate that determines the cost of everything from credit cards to mortgages, to 1% by the summer of 2003 from 6.5% at the start of 2001. Since most of the cost of financing a house over 30 years is interest, monthly house payments shrank and demand for houses soared. In some markets a string of big yearly increases in house prices led to panic buying.

Stocks vs. Houses: Conclusion

For house returns over the next 20 years to match those over the past 20, the government and private lenders would have to “up the ante” by relaxing borrowing standards further. Given the recent attention paid to swelling foreclosures, that seems unlikely. I suspect real returns will turn negative over most of the next two decades, but that house prices won’t necessarily dip. Since 1963 they’ve done so in only two years, vs. 18 for stocks. That’s because homeowners mostly just stick it out rather than sell during soft markets. But if house prices remain flat, they produce negative real returns due to the creep of inflation. According to calculations made by The Economist in the summer of 2005, house prices would have to stay flat for 12 years with annual inflation at 2.5% for the ratio of prices to rents to fall from its 2005 perch to merely its 1975 to 2000 average.

So to sum up why I rent: Shares right now cost 16 times earnings and over long time periods return 7% a year after inflation. Houses right now cost 19 times their “earnings” and over long time periods return zero after inflation. And they look likely to return less than that for a while.

On the following page I’ve tried to anticipate and address questions and objections.


“You can’t live in your stocks” or “Renters throw money down the drain.”

Rent is the cost of owning shares with money you would otherwise spend on a house. Houses have ownership costs, too: taxes, insurance and maintenance. Rent costs about 5% of house prices each year if we apply the price/rent ratio of 19. House incidentals often cost around 2%. If you have $300,000 and a choice between spending it on a house or shares, you’ll pay $6,000 a year in incidentals if you buy the house or about $15,000 a year ($1,250 a month) in rent if you buy the shares. But the shares will return $21,000 a year after inflation while the house will return zero. (My numbers work out even better than these. I pay a smidgen less than $1,250 a month for rent, while house prices in my neighborhood are far higher than $300,000.)

Note that houses and shares have transaction costs, too. Home buyers pay around 1% in closing costs when they buy and 6% in broker commissions when they sell. Share buyers pay $10 trading commissions, which are negligible for buy-and-hold investors.

“House buyers get tax breaks.”

So do share buyers, but both are a bad deal. The interest on loans for houses (mortgages) and shares (margin balances) is tax-deductible. But the rates are almost always too high. A big house loan presently costs 6.1% interest while a big stock loan costs about 9%. For the returns, we can forget about inflation because it helps debtors while hurting investors, making it a wash for those who borrow to invest. Still, nominal returns of 3% for houses and 10% for stocks aren’t high enough to justify those rates. The tax breaks aren’t really breaks at all. Moreover, a majority of homeowners don’t claim them. Their incomes are low enough to make the standard deduction a better deal.

“What about the pride of home ownership?”

It’s not for me. I define ownership as no longer having to pay for something and being able to do as I please with it. I own my coffee maker. House owners must pay taxes each year even when their mortgage payments are done. In certain markets they can’t even make changes to the houses they’ve paid for without seeking the approval of others. Personally, I feel the pride of ownership for shares of businesses, and I’m proud to occupy a nice place while leaving the burden of poor returns and maintenance to someone else.

“You seem to knock government housing subsidies, but they’ve helped many Americans afford homes.”

My inner socialist agrees. My other inner socialist worries that the government has effectively raised prices to the point where the middle class can’t afford houses, or buries itself in debt to own them. My inner capitalist is too busy watching shares to care about house prices. My inner conspiracy theorist notes that while politicians tout the social benefits of homeownership none mentions its tax benefits to the government. I pay no taxes on the overall value of my stock portfolio, just on my cashed-in gains and collected dividends. But Americans pay taxes on the full $11 trillion worth of housing they own plus the $10 trillion worth of it they’re still paying off.

“Houses are bigger than apartments.”

True, and both can be rented. A third of renters live in single-family houses. I prefer an apartment for now. I like not having to fill it with stuff. I like using a fifth of the energy of the average American. I like being 20 minutes from work and (this is unique to New Yorkers) not having owned a car in 10 years. I like not stressing over whether to get the marble countertops or the imported tiles or the 52-inch flat screen. I’m not especially frugal; I spend a teacher’s salary each year on restaurants and travel. But I guess I’m too busy or lazy right now to bother with a big house and its innards.

“Are you saying I should sell my big house and rent an apartment instead?”

No, unless you have more space than you need and moving wouldn’t be disruptive to your family, and you want to cash in on recent housing gains, make more money over the next couple of decades, use less energy while simplifying your life, and you don’t mind seeming odd to friends. In which case, yes. But really, I’m not trying to win anyone over. Strong demand for houses keeps my rent cheap.

“Renting is for poor people.”

True. But it’s for rich people, too. The average renter makes about $34,000 a year, but while the percentage of renters declines after incomes exceed $20,000 and rents exceed $600 a month, it jumps again once incomes top $150,000 and rents top $1,200 a month. In other words, poor people rent modest apartments for lack of choice. Middle-income people buy houses. High-income people, presumably with a dose of financial savvy, often rent nice apartments instead of buying.

“You say houses return zero. But I’ve made a fortune on my house in recent years.”

I’m referring to inflation-adjusted returns over long time periods, absent external boosts to demand. You’re referring to gross returns over a short time period that combined lax borrowing standards and ultra-low interest rates. Over the next 20 years I believe houses will return zero or slightly less after inflation and that stocks will return 7%.

“So you’re never going to buy a house? What about raising a family?”

I might buy one eventually, but the longer I can put it off the more I’ll get out of the shares I’ll have to sell to afford it. I’m 34 now with a fiancée and a fish. I’m going to try to rent for at least 10 more years. If I have kids I’ll probably move into a big apartment or a house once they reach running-around age. I’ll rent, most likely.

The Problems of Humanity September 2008

September 27, 2008
  • North Korea blackmails the world again and again, extorting aid using the nuclear threat to keep its despotic regime alive.
  • Terrorists use their religion as the excuse to explode a dirty nuclear bomb in one of the great cities of the world.
  • Russia’s ambitions destabilize the world.
  • The world enslavement through oil continues.
  • Hunger haunts the world as population control fails.
  • Unstoppable man-made viral plagues devastate mankind.
  • Sea levels rise and inundate coastal civilizations.
  • America sinks into a terrible economic disaster.
  • More to come…

Take Some Time

September 27, 2008

Take some Time
– By Leon Hansen –

Take some time to smell the flowers
As you walk the paths of life

Take some time to ease the tensions
From the challenges and strife

Take some time to hear the birds sing
As they usher in the dawn
Though the day be just emerging
Too soon it will be gone

Take some time to watch the sunrise
Now and then a sunset too
Just be sure that seeking pleasure
Isn’t all you ever do

Take some time to count your blessings
Though you feel they’re not that great
You’ll find they’re more abundant
Than you thought; at any rate

Take some time to banish hatred
When and where you can
Just detest man’s evil ways
And not your fellow man

Take some time to love your children
Every moment you are free
The benefits exceedeth
A university degree

Take some time to love your neighbour
And ever more important still

Take some time to love yourself
Or not many others will
And if you don’t like that image
of yourself that others see

Take some time to see some changes
Be the best that you can be

Take some time to help another
Who you think might need a hand
You will find the satisfaction
Leaves you feeling sort of grand

Take some time to live by virtue
In the best way that is known,
And respect the rights of others
As equal to your own

Take some time to just appreciate
The fact that you are here
And to know that Higher Power
And to trust It without Fear

If you do these things with diligence
You will eventually be glad
If you don’t attempt to do them
you may one day wish you had

Although this no doubt could impose
upon your life for seeking wealth.
There should be little question
That it could improve your health

And though you might not be as
wealthy nor drive so fine a car,
You’ll find you will be richer
In other ways by far

You can control your time! Yes. Time is within your control.

Now you’re probably asking, “How can you control time in a 24/7 environment?”

Winners carry this secret with them all the time. They know that each person is given exactly 24 hours a day and its how time is spent or wasted that spells the difference between success, mediocrity or failure.

You can control your time. You choose how to “spend” your time and how much of your time to give to various activities. You’ll never get more time than the 24 hours you’re given each day. But nobody can ever shortchange it but you.

Doesn’t it amaze you that the people who make the worst use of time may be the same ones who complain that there is never enough time.

Sociologists say that the most important currency for the 21st century is time not money.

Therefore you make sure that you spend your time wisely.

This doesn’t mean you bury yourself in work and fail to maintain balance in life, this simply means you spend time on things that will help you grow as a person and you stay away from activities that would hinder you from your success goals.

• When you spend more time watching TV than reading books you’re wasting your time.

• When you would rather be out with the boys than spend time with your family you are wasting time.

• When you gulp it down, shot it up or snort it in you’re not only wasting your time you’re wasting your life.

Now may I make a suggestion.

Rather than thinking time management all the time, why not start thinking “task management?”

Prioritize tasks that add value towards achieving your lifetime success goals. Anything that does not accomplish this you discard and throw it into your wastebasket.

Leon Hansen composed this poem entitled “Take Some Time.”

Read the words carefully:

Take some time by Leon Hansen

Take some time to smell the flowers. As you walk the paths of life.

Take some time to ease the tensions. From the challenges and the strife.

Take some time to hear the birds sing. As they usher in the dawn.

Though the day be just emerging. Too soon it will be gone.

Take some time to watch a sunrise. Now and then a sunset too.

Just be sure that seeking pleasure. Isn’t all you ever do.

Take some time to count your blessings. Though you feel they’re not that great.

You will find they’re more abundant. Than you thought, at any rate.

Take some time to banish hatred. When and where you can.

Just detest man’s evil ways. And not your fellow man.

Take some time to love your children. Every moment you are free.

The benefits sure exceed. A university degree.

Take some time to love your neighbor. And even more important still,

Take some time to love yourself. Or not many others will.

And if you don’t like that image. Of yourself that others see,

Take some time to make some changes. Be the best that you can be.

Take some time to help another. Who you think might need a hand.

You will find the satisfaction. Leaves you feeling sort of grand.

Take some time to live by virtue. In the best way that is known,

And respect the rights of others. As equal to your own.

Take some time to just appreciate. The fact that you are here,

And to know the risen Lord. And to trust Him without fear.

If you do these things with diligence. You will eventually be glad.

If you don’t attempt to do them. You may one day wish you had.

Although this no doubt could impose. Upon your time for seeking wealth,

There should be little question. That it could improve your health.

And though you might not be as wealthy. Nor drive so fine a car,

You’ll find you will be richer. In other ways by far.1

Your time and mine is in God’s Hands but He has empowered us to use it responsibly.